THE BUTTERFLY EFFECT: Catalyst of Change that Creates Competitive Advantage

You may be familiar with the Butterfly Effect, which theorizes that something seemingly innocuous, such as a butterfly‘s wings, may be the catalyst for something larger, such as a hurricane.
  
This theory can be applied to business. We’ve all been there. Things are running smoothly, and then whack, seemingly out of nowhere, your competition takes away your best customer, or the economy shifts.

You never saw it coming, except of course, you did. Now, with the benefit of hindsight, you can see that the signs were there. You just didn’t recognize them at the time.

Companies are great at what they do. They’ve honed their operations, refined their products, and developed their brands. 

Yet what makes these companies so good at what they do makes it difficult for them to respond quickly to change because of the infrastructure (employees, investments) already established. Change, that appears to happen quickly, can lead to chaos in an organization. The butterfly’s wings are at work.

Change, that appears to happen quickly, can lead to chaos in an organization. The butterfly’s wings are at work.

The most consistently successful companies, with success defined in terms of growth and profitability, are organizations that are able to see and respond to changes in the marketplace more capably, and quickly, than their competitors. 

WHERE TO LOOK FOR CHANGE

Change can be grouped into three categories: 

  1. Macro Change
  2. Market Change
  3. Internal Change

These changes present opportunities to prepared organizations, which results in them achieving an unfair competitive advantage over competitors. 

This discovery is stunning for an organization that competes in a mature industry, where it's more challenging to carve out a competitive advantage. The basic questions leaders need to ask are:

  • How do we avoid threats on the horizon?
  • How do we identify opportunities for growth?
  • How do we bring more value to customers?
  • How do we achieve a lasting advantage and stay ahead of our competitors?

What are leaders to do? They can begin by doing a Scenario Analysis.

SCENARIO ANALYSIS

Scenario analysis simplifies a complex future by providing you the opportunity to ask “what if” questions, and to rehearse how you will respond should a certain event happen in the future.

Scenario analysis was first developed and used by the U.S. Air Force during World War II. It provides an invaluable opportunity to have a strategic discussion around key drivers, and critical uncertainties in your operating environment.

With scenario analysis, you push the bounds of your thinking, and you’re imagining not just one, but a variety of future possibilities. This activity helps you see and prepare for threats on the horizon, identify unanticipated opportunities, and innovate. 

That butterfly’s wings may be a catalyst that drives unexpected opportunities for your organization.

GETTING STARTED WITH SCENARIO ANALYSIS

A simple way to begin is to start to take notice changes you are seeing. Ask yourself:

  • What has happened recently that is unexpected, unusual, alarming or amusing?

  • What opportunities and pitfalls do these events reveal?

Appreciate the challenges facing your organization.

When you dig deeper into the problems you’ve identified, you’ll gain new insights that reveal opportunities to create a formidable competitive advantage . . . because your competitors are not looking.

If you would like to learn more about how you can utilize Scenario Analysis, and our other tools and resources, please feel free to reach out directly to me and call 847.989.0513 or email us at http://www.profit-strategies.com/hire-us/.

Bonita Richter, MBA
 

Macro Strategy Insights from Jack Ablin, CFA, Chief Investment Officer at BMO Wealth Management

Macro Strategy Insights from Jack Ablin, CFA, Chief Investment Officer at BMO Wealth Management

Getting insights from one of the top investment policy and strategists in the U.S. is priceless. Inside are some of my notes from an invitation-only meeting I attended last week with Jack, and the BMO Wealth Management group, about the outlook for the economy.